Trade Policy and Race/Ethnicity



Simon Lester | International Economic Law and Policy Blog

There was some Twitter discussion last week of a new paper from Global Trade Watch called “Trade Discrimination: The Disproportionate, Underreported Damage to U.S. Black and Latino Workers From U.S. Trade Policies.” I can see how it would be useful to study the impact of U.S. trade policy, and of economic policy more generally, on the economic well-being of different ethnic groups. Unfortunately, I don’t think the report does a very good job with the issue. It seems to me that it mostly just takes the traditional trade critic approach (e.g., “U.S. Bureau of Labor Statistics’ data show that during the NAFTA-WTO-China PNTR era, over 60,000 U.S. factories have closed”), and then adds in an ethnicity/race component to the analysis of the lost jobs. This approach misses a lot.

First of all, I’ve seen many critiques of the factory/job loss numbers, and it seems to me that some critics are accepting the headline numbers on faith without doing any analysis to make sure those numbers are accurate. 

Second, a lot of other things have been going on in the economy from 1994 (when NAFTA went into force) to today, and there are other reasons for factory closures/job losses over this period (technological advances being the main one). I’m not sure how you can write a paper about manufacturing job losses and not mention that.

Third, there were also job gains during that period, and surely that should be taken into account. Identifying the job losses over a period without talking about job gains is a big oversight and paints a misleading picture of what has been happening in the economy.

Fourth, there are economic benefits to consumers from lowering tariffs, which means there are benefits for all Americans, and in particular this helps Americans with lower incomes. If you are serious about assessing the impact of trade liberalization, you should make some effort to take this into account.

And finally, even if your focus is on the well-being of Americans, it’s at least worth noting the benefits of trade to people in other countries.

If the Global Trade Watch paper comes up short, what should others do with this issue instead? If I were an economist and had the skills to do this kind of work, I would break the analysis down into sub-categories, because “trade policy” covers a lot of ground. To this end, I would look at the impact of tariff liberalization, tariff imposition, intellectual property protection, regulatory standards, investment protection, etc. For example, what was the impact of Trump’s tariffs (and the resulting trade wars) on different ethnic groups, in terms of their ability to consume and in terms of employment in manufacturing or other sectors?

None of this will be easy of course, and it’s probably too much to do it all at once in a single paper. But this is the kind of objective research that would be useful for a discussion of U.S. trade policy and race.

As a final point, the authors seem to want to disassociate themselves from Trump. For instance, they say:

Donald Trump hijacked progressives’ critique of corporate globalization and job offshoring, but reframed it into a narrative of resentment with racialized appeals to white working-class voters.

But did he hijack it? Trump has been offering his critique of U.S. trade policy/trade agreements for decades, as have Global Trade Watch and various other critics. There has always been some overlap between his critique and the Global Trade Watch critique. In addition to having similar concerns about offshoring, Global Trade Watch continues to be very focused on the trade deficit, just as Trump is.

Of course, there are some differences as well. Trump bashes foreign countries for cheating us, and U.S. negotiators for doing a bad job. Global Trade Watch focuses more on corporate influence. And with progressives, it’s important to note that there are a range of views within the group of people who consider themselves critics of the existing system. (Some progressives are more supportive of it.) 

Regardless of how we should think about the relationship between the views of Trump and those of progressive critics of the trade regime, we are now about to move forward. Trump will soon be out of office, and it’s possible these critics will have some say in what the Biden administration should do. So what exactly do these progressives want? The report states that:

what already is well documented is that Trump did not deliver his promises to working-class people. Instead of stopping trade-related job loss and offshoring, during the Trump administration 311,427 American jobs have been government-certified as lost to trade, with 202,543 explicitly listed as offshored.

Trump’s approach to stopping offshoring involved lots of tariffs and trade wars. What specifically does Global Trade Watch suggest as an alternative? If they are concerned about the impact of trade policy on various groups, as their report suggests, I hope they will consider why tariffs and trade wars led to the negative results they noted under the Trump administration.

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